What’s interesting about today’s action is that while the markets have become overbought they did not hit extreme overbought levels, which has been the norm for the last several months. For example:
Zweig Breadth Thrust rose to 60.76, but 4wk New High/Low Ratio only rose to 89.95, when somewhere between 90 and 95 marks extreme overbought levels.
$NYDNV dropped to 113, but $NYADV only rose to 2406, when 2500 is the line in the sand.
So these above are not conclusive. Still, I think it would be naive to think that the market will give an encore presentation tomorrow and most likely will give us a pause day.
But there are now a few other things to pay attention to for the remainder of the week and perhaps into next week.
$BPSPX has now pushed to 75.6%. When $BPSPX rises above 75, some traders will refrain from adding to existing positions while others will cash out. Back on October 27th, $BPSPX rose to 77.
$SPXA50R has now pushed to 85.4, its highest reading since late October.
We all know what happened next so don’t be surprised if we’re not getting ready to put in some kind of top of one degree or another.
Chart of $SPX showing it moving above all MA’s and trend lines as bulls continue to maintain directional control.